First Aluminium Nigeria Plc has explained its decision to delist from the Nigerian Stock Exchange (NSE), saying its shareholders were not benefiting from the continued listing and were not getting exit opportunities, while the company’s shares have continued to trade at a significant discount to the intrinsic value.
First Aluminium Nigeria Plc was listed in the daily official list of the Nigerian Stock Exchange in 1992. ALUCON Holdings S.A. holds about 75.48 per cent of the current shareholding with minority shareholders holding about 24.52 per cent.
However, in a notification to the NSE yesterday, First Aluminium said over the last seven years, there has been little or no trading activity on the shares held by the minority shareholders.
“The share price was stuck at 50 kobo for about six years between June 2011 and June 2017, and thereafter experienced further diminution, both in share price and trading volumes. Over the last 18 months daily average volume ranged between 2,815 to roughly 2,918 units during the period July 2017 to December 2018. Shareholders are not benefiting from the continued listing as they are not getting exit opportunities and their investments have been locked up, thereby finding it difficult to dispose of their shareholding. Neither the company nor its shareholders have benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value,” the company said.
Furthermore, rationalisation of operational expenses to support the company’s business and to meet the needs of various stakeholders as the attendant cost required to comply with its listing requirements including filing fees, penalties or sanctions, are not commensurate with the benefits to the company.
Also, the increasing competitive environment and the struggle to defend market share have resulted in market pressure to reduce price and this might significantly impact operating margin.
According to the company, the delisting will afford the company to carry-out an imminent corporate restructuring exercise to take advantage of emerging opportunities and may consider re-listing the company in the future if the market conditions are favourable.
“The voluntary delisting will not occasion loss of business opportunities as there are similar unlisted aluminium companies who are commanding significant share of the aluminium market. Also, minority shareholders will not lose their shares because of the voluntary delisting and such shareholders may retain their membership in the unlisted company.
The majority shareholder are the promoters of the transaction and offer other shareholders the opportunity to either remain shareholders of the unlisted company or accept a consideration for their shares which the majority shareholders are willing to purchase.